BankUnited Shares Surge on Buyout Talk

(Reuters) – Shares of BankUnited Financial Corp (BKUNA.O) rose more than 70 percent, after a media report said billionaire investor Wilbur Ross and the Carlyle private equity group are considering a joint bid for the embattled lender.

The two investors were conducting due diligence, the Financial Times said, citing people familiar with the matter.

Wilbur Ross and the Carlyle group could not be immediately reached for comments.

BankUnited replied to the email seeking comments, saying it does not comment on speculations.

“There had been a lot of speculation over the last couple of months that private equity groups are looking at BankUnited,” Raymond James analyst Michael Rose told Reuters.

The Coral Gables, Florida-based parent of BankUnited FSB was rocked by the current economic downturn as it saw the value of its mortgage portfolio deteriorate substantially last year.

“Asset quality in its mortgage portfolio has been under incredible stress with no signs of getting better anytime soon,” analyst Rose said.

In a regulatory filing on Jan. 27, BankUnited said if it failed in its efforts to raise capital, it was highly unlikely for the company to continue as a going concern.

BankUnited, which has been trying to raise capital for the last few months, has seen it shares tumble more than 80 percent in the last six months due to mounting losses and liquidity concerns.

In August, the Office of Thrift Supervision advised it of “certain concerns” and ordered it to reduce exposure to riskier mortgages and limit asset growth.

Given the size and the amount of assets of BankUnited, the regulators have given the company some leeway to try and workout a deal as it would be a pretty big cost to the regulators to try and dispose off those assets, analyst Rose said.

As of June 30, the company had total assets of $14 billion.

The bank’s Tier 1 core capital ratio was 3.4 percent as of Sept. 30, and the bank failed to meet the minimum capital requirement of 7 percent by Dec. 31, the company said in a regulatory filing.

Shares of the company were trading up 48 percent at 36 cents in afternoon trade on Nasdaq.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Anil D’Silva)